Weekly Mortgage Overview: 9/10/12

By September 10, 2012Mortgage Overview

This week markets await the decision from the FOMC meeting that ends Thursday. It appears markets are evenly divided about what the Fed will do. Another easing from the Fed is likely given the sluggish economy, the question is when—now or in October. Treasury will auction $66B of notes and bonds starting Tuesday through Thursday; 3 yr, 10 yr and 30 yr bond. Economic data this week is thin until Friday with August retail sales, industrial production, factory usage and August CPI.

 

The recent rally in the mortgage markets driven by the 10 yr note has stalled. After falling frm 1.86% on the 10 yr down to 1.55%, rates have edged back up slightly with the 10 yr at 1.67%. MBS prices also well off their best levels. It is a waiting game this week until the FOMC policy statement at 12:30 Thursday then Bernanke will hold a press conference at 2:15 Thursday. Technical look OK in the bond and mortgage markets to start the week, however the recent selling last Thursday and Friday have lessened the bullish bias somewhat. Look for possible price volatility this week as markets continue to handicap a Fed easing. If, or when, the Fed eases we expect they will increase purchases of MBSs to keep mortgage rates from increasing much. That said, even the recent low rates hasn’t increased re-finances or [purchases according to the MBA weekly mortgage applications data.

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